WalMart is now paying us.

WalMart continues to work for us. We’ve made back our early losses and gained almost $2700 since February 10.

We are now profitable by $165, and our daily time decay is paying us $30 a day with risk near zero (Beta-weighted to the DIA). We have continued to rebuild the position so the net position now is 700 shares long. This is created through a combination of short puts against our 300 short shares.

The stock has reversed course and now appears to be in an extended bull market, rising steadily from the low 70’s in early February. We could guess that better weather has begun to result in better sales for the company and is helping the stock to rise, but that would be a guess. We really don’t care about trying to discover the ‘why” – it doesn’t matter. What matters is that we recognize the direction has changed from bear to bull and that we go with it.

This is why we have been increasing our position by selling puts. If the stock is rising and we use our system to build a position with short puts, most of them should lose value over time or even better, expire worthless. Our larger net long position is now generating a higher daily time decay. We are short some 77, 78, and 79 puts spread over the next two expirations. With all of our short contracts now so close to expiration, our daily time decay should rise each day for the next 2 weeks. At least, that is the theory. Reality is sometimes a different thing and if the stock price experiences a large movement or volatility changes, we could have unexpected results. That is due to the dynamic nature of the options market and also that many factors influence pricing. We will have more updates as we expect our current structure to generate good money over the next two expiration cycles.